CHICAGO – Motorola said Friday that it is cutting 3,500 jobs and taking other steps to reduce costs after misjudgments on pricing and sales forecasts for its high-end phones contributed to its least profitable quarter since 2004.

The move came as the world’s No. 2 cellphone maker reported a 48 percent decline in fourth-quarter earnings, to $624 million, on a steep drop in profitability in the handset business.

Chief Executive Ed Zander announced the cuts at a specially called analysts’ meeting in New York, saying Motorola can save about $400 million over two years by eliminating 5 percent of its workforce.

But while calling the most recent results disappointing, Zander dismissed any need for a change in overall strategy, as some analysts urged when the shortfall in sales and profits was disclosed two weeks ago. He said continuing strong demand for the trend-setting Razr and its offshoot phones puts the company in position to return to double-digit operating margins in the second half of 2007.

He also dismissed suggestions that the Razr, which turned around the company’s fortunes two years ago, is running out of momentum.

“It’s funny, I keep reading about Razrs being tired,” he said on an earlier conference call. “We sold more Razrs in quarter four than in any quarter we ever had. We now have sold over 75 million Razrs worldwide.”

Facing stiffer competition from its rivals’ new products, Motorola aggressively cut prices of its phones during the quarter, especially in emerging markets, to gain market share but at the expense of profit margins. Executives also acknowledged misjudging some markets and, as Zander put it, making wrong assumptions about how many products would sell at what price.

The decision to shed jobs comes after Motorola’s recent $3.9 billion acquisition of Symbol Technologies, a maker of bar code scanners and handheld computers, had increased the Schaumburg, Ill.-based company’s workforce to 70,000 from about 67,000. The cuts are to be spread across the company and completed in the first half.

Coupled with its prediction that it will post full-year sales of $46 billion to $49 billion, above analysts’ consensus estimate of $45.9 billion, the news sent Motorola’s stock higher despite the lackluster earnings numbers.

Shares gained 56 cents, or 3 percent, to close at $19.27 in heavy trading on the New York Stock Exchange.

Not everyone outside Wall Street was impressed. Lowell Peterson, an attorney who has represented unions and laid-off employees in corporate bankruptcies, said the labor cuts are an example of “the Alice in Wonderland logic of today’s corporate thinking.”

“Everything that’s been disclosed suggests it’s not a question of overcapacity, it’s not a question of high fixed labor costs, it’s a question of pricing” that hurt Motorola’s results, said Peterson, of the law firm Meyer, Suozzi, English & Klein. “If you have a pricing problem, you should fix the pricing problem.”

Morningstar analyst John Slack said efforts to cut Razr costs, such as new software initiatives and a single chipset, should bring improvement but not immediately.

“It may take a couple quarters,” he said.

Earnings amounted to 25 cents a share and were down from $1.2 billion, or 46 cents a share, a year earlier when profits were boosted by a large gain from a legal settlement. Excluding certain items, Motorola said earnings from continuing operations were 21 cents a share.

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